OFFER AND ACCEPTANCE

Birth of a Contract of Sale

from the moment there is a

meeting of minds (consensual)
upon the thing which is the object
of the contract (subject matter)
and upon the price and the
manner
of
its
payment
(consideration)
-Santos v. Heirs of Jose P. Mariano

Court held:

Sale is at once perfected when a

person (the seller) obligates himself
for a price certain, to deliver and to
transfer ownership of a specified
thing or right to another (the buyer)
over which the latter agrees.
-Valdez v. Court of Appeals

Vitiation of consent

mistake
violence
intimidation
undue influence
Fraud

(These do not make the contract void ab initio

but only voidable)
-Katipunan v. Katipunan

Court held:

Until a sale is perfected, it cannot be an

independent source of obligation, nor serve as
a binding juridical relation. In sales particularly,
the contract is perfected when the seller
obligates himself, for a price certain, to deliver
and to transfer ownership of a thing or right to
the buyer, over which the latter agrees and
obligates himself to pay the price.
-Ang Yu Asuncion v. Court of Appeals

In another case, the Court held:

Even when there is a duly executed

written document purporting to be a sale,
the same cannot be considered valid
when the evidence presented shows that
there had been no meeting of the minds
between the supposed seller and the
corresponding buyer.
Santos v. Heirs of Jose P. Mariano

Consent that Perfects a Sale

Article 1475- provides that the sale is perfected

at the moment there is a meeting of minds
upon the thing which is the object of the
contract and upon the price.
Article 1319 defines consent ormeeting of
minds as manifested by the meeting of the
offer and the acceptance upon the thing and
the cause which are to constitute the contract.

Offer and Acceptance

Must be certain and absolute respectively.

it must be plain, unequivocal,

unconditional and without variance
of any sort from the proposal
-Manila Metal Container Corp. v. PNB

Offer Must Be Certain

the subject matter that has all three requisites

of possible thing, licit, and determinate or at
least determinable; and with
price that has the requisites of being real,
money or its equivalent(i.e., constitute
valuable consideration), and must be certain
or at least ascertainable, including on the
terms of payment thereof.

Offer Must Be Certain

The absence of even just one of

the essential requisites pertaining to
either subject matter or price in the
terms of the offer, makes such offer
not certain, and cannot give rise to
a valid sale, even when such offer is
absolutely accepted by the offeree.

Acceptance Must Be Absolute

Zayco v. Serra held that in order for an

acceptance to have the effect of
converting an offer to sell into a
perfected contract, it must be plain and
unconditional, and it will not be so, if it
involves any new proposition, for in that
case, it will not be in conformity with the
offer, which is what gives rise to the
birth of the contract.

Acceptance Must Be Absolute

Beaumont v. Prieto, held that

promises are binding when and so long
as they are accepted in the exact terms
in which they are made, and that it
would not be legally proper to modify
the conditions imposed by the offeror
without his consent.

Acceptance Must Be Absolute

In order that the acceptance of a proposition

or offer may be efficacious, perfect and
binding upon the parties thereto, it is
necessary that such acceptance should be
unequivocal and unconditional and the
acceptance and proposition shall be without
any variation whatsoever. Any modification
or deviation from the terms of the offer
annuls the latter and frees the offeror.

Acceptance Must Be Absolute

Yuvienco v. Dacuycuy, the use of the

term to negotiate in the acceptance
letter given by the buyer was held to
indicate that there was as yet no
absolute acceptance of the offer made,
since the term is practically the
opposite of the idea that an agreement
has been reached.

Acceptance Must Be Absolute

DBP v. Ong, the Court held that placing the word

Noted and signing such note at the bottom of
the written offer cannot be considered an
acceptance that would give rise to a valid sale: By
no stretch of imagination, however, can the mere
NOTING of such an offer be taken to mean an
approval of the supposed sale. Quite the contrary,
the very circumstance that the offer to purchase
was merely NOTED by the branch manager and
not approved, is a clear indication that there is no
perfected contract of sale to speak of.

Acceptance Must Be Absolute

Limketkai Sons Milling, Inc. v. Court of

Appeals, The Court held that there was a
perfected contract between BPI and the buyer
there having been mutual consent between
the parties, the subject matter was definite;
and the consideration was determined.

Acceptance Must Be Absolute

It is true that an acceptance may contain a

request for certain changes in the terms of the
offer and yet be a binding acceptance. So
long as it is clear that the meaning of the
acceptance is positively and unequivocally to
accept the offer, whether such request is
granted or not, a contract is formed.
(Citing Villonco doctrine)

Acceptance Must Be Absolute

Toyota Shaw, Inc. v. Court of Appeals, the

Court held that a document cannot constitute
a sale even when it provides for a down
payment since the provision on the down
payment made no specific reference to a sale
of a vehicle. Definiteness as to the price is an
essential element of a binding agreement to
sell personal property.

a. When Deviation Allowed

In Villonco v. Bormaheco, The Court held that

there was a perfected sale that arose from
the exchange of correspondences, even if
literally,
there
was
a
correction
or
modification contained in the acceptance, the
changes were not substantial, but merely
clarificatory. Such is corroborated also by the
fact, that upon receipt of the check covering
the
earnest
money,
Bormaheco
had
encashed the same.

b. Acceptance May Be Express or

Implied

Acceptance may be evidenced by some

act, or conduct, communicated to the
offeror, either in a formal or an informal
manner, that clearly manifest the
intention or determination to accept the
offer to buy or sell.

Gomez vs. Court of Appeals

Acceptance was manifested through:

payment of the purchase price
declaration of the property for taxation
purposes,
payment of real estate taxes thereon, and
similar acts showing buyers assent to the
contract.

Oesmer v. Paraiso Dev. Corp.

Acceptance of the terms of the

sale
of
co-ownership
rights
through an agent was expressed
by the co-owners signing as
witnesses to the covering deed of
sale.

c. Acceptance by Letter or
Telegram

Acceptance made by letter or telegram does

not bind the offeror except from the time it
came to his knowledge. Therefore, even if an
acceptance has been mailed or sent to the
offeror, the offeror may still withdraw his offer
anytime before he has knowledge of the
acceptance.

d. Acceptance Subject to
Suspensive Condition

Even when there is a meeting of minds as to

the subject matter and the price, there is
deemed to be no perfected sale, if the sale is
subject to suspensive condition.
- Gan, Sr. v. Reforma

d. Acceptance Subject to
Suspensive Condition

Peoples Homesite & Housing Corp. v.

Court of Appeals, held that there can be
no perfected sale of a subdivision lot
where the award thereof was expressly
made subject to approval by higher
authorities and there eventually was no
acceptance
manifested
by
the
supposed awardee.

e. Acceptance in Auction Sales

A sale by auction is perfected when the

auctioneer announces its perfection by the fall
of the hammer, or in
other customary
manner.138 Until such announcement is made,
any bidder may retract his bid, and the
auctioneer may withdraw the goods from the
sale, unless the auction has been announced
to be without reserve.
Province of Cebu v. Heirs of Rufina Morales,

e. Acceptance in Auction Sales

The owner of the property sold at

auction may provide the terms under
which the auction will proceed and the
same are binding upon all bidders,
whether they knew of such conditions
or not.
Leoquinco v. Postal Savings Bank

4. Earnest Money

a. Function of Earnest Money

Article 1482 of the Civil Code, whenever
earnest money is given in a sale, it shall be
considered as part of the price and as proof of
the perfection of the contract. 143 The rule is
no more than a disputable presumption and
prevails only in the absence of contrary or
rebuttal evidence.
The presumption is founded upon the fact that
there must first be a valid sale.

San Miguel Properties Philippines

v. Huang

it was held that it is not the giving

of earnest money, but the proof of
the concurrence of all the essential
elements of the sale which
establishes the existence of a
perfected sale.

Serrano v. Caguiat

it was held that the presumption

under Article 1482 does not apply
when earnest money is given in a
contract to sell.

Villonco v. Bormaheco

held that even when the sale is subject

to a condition, the acceptance of the
earnest money would prove that the
sale is conditionally consummated or
partly executed subject to the fulfilment
of the condition, the nonfulfillment of
which would be a negative resolutory
condition.

Philippine National Bank v. Court

of
Appeals

receipt of earnest money could not lead to the

conclusion that there was a valid and binding sale
because of documentary evidence showing that
the parties entered into a contract to sell, which is
akin to a conditional sale where the effi cacy or
obligatory force of the vendors obligation to
transfer title is subordinated to the happening of a
future and uncertain event, so that if the
suspensive condition does not take place, the
parties would stand as if the conditional obligation
had never existed.

b. Varying Treatments of Earnest

Money

in Spouses Doromal, Sr. v. Court of Appeals, the

amount given as earnest money by the buyer,
was acknowledged by the sellers to have been
received under the concept of the old Civil Code,
as a guarantee that the buyer would not back out,
and that if they should do so they would forfeit
the amount paid. Spouses Doromal took into
consideration that even with the payment of the
earnest money, that would not by itself give rise
to a valid and binding sale, considering that it is
not clear that there was already a definite
agreement as to the price.

c. Distinguishing Earnest Money

and Option Money
EARNEST MONEY

OPTION MONEY

1. part of the purchase

Price

1. is the money given

as a distinct
consideration for an
option contract

2. given only where

there is already a sale

2. Applies to a sale not

yet perfected

3. the buyer is bound to 3. he is not required to

pay the balance
buy, but may even
forfeit it depending on

d. Effect of Rescission on Earnest

Money Received

In the absence of a specific stipulation,

the seller of real estate cannot keep the
earnest money received to answer for
the damages sustained in the event the
sale fails due to the fault of the
prospective buyer.

d. Effect of Rescission on Earnest

Money Received

whenever earnest money is given in a sale, it

shall be considered as part of the purchase
price and as proof of the perfection of the
contract; consequently, amounts received as
part of the down payment and to be credited
to the payment of the total purchase price
could not be forfeited when the buyer should
fail to pay the balance of the price, especially
in the absence of a clear and express
agreement thereon.

d. Effect of Rescission on Earnest

Money Received

When the seller seeks to rescind the sale,

under Article 1385 of the Civil Code, such
rescission creates the obligation to return the
things which were the object of the contract
together with their fruits and interest.

5. Place of Perfection

Generally, the sales place of perfection

is where there is a meeting of the offer
and the acceptance upon the thing and
the cause which are to constitute the
contract.158 In case of acceptance
through letter or telegram, it is
presumed that the contract was entered
into in the place where the offer was
made.

6. Expenses of Execution and

Registration

In general, the expenses for the execution and

registration of the sale shall be borne by the
seller, unless there is a stipulation to the
contrary.160 In the case of goods, unless
otherwise agreed, the expenses of, and
incidental to, putting the goods into a
deliverable state must be borne by the seller.
The duty to withhold taxes due on the sale is
imposed on the seller.

7. Performance Should Not Affect

Perfection

Since sale is a consensual contract,

then the ability of the parties to perform
the contract (after perfection) does not
affect the perfection of the contract,
which occurs when the minds of the
parties have met as to the subject
matter, price and terms of payment.

Johannes Schuback & Sons Phil.

Trading Corp. v. Court of Appeals

where the seller quoted to the buyer

the description and unit price and total
price, and the buyer had sent in reply a
purchase order, there was already a
perfected sale, even when the required
letter of credit had not been opened by
the buyer.

Balatbat v. Court of Appeals

the Court reiterated the rule that the non-payment

of the price does not render void nor reverse the
effects of the perfection of the contract of sale.
However, the Court on other occasions has taken
the position that when the seller is no longer the
owner of the land sold at the time of sale, the
contract is void,167 in spite of the fact that Articles
1402 and 1459 of the Civil Code recognize that a
sale is valid even the subject matter is not owned
by the seller at the time of perfection, provided the
seller has a right to transfer ownership at the time
of delivery.

Nool v. Court of Appeals

the Court, held that although Articles 1402

and 1459 of the Civil Code recognize that the
seller need not be the owner of the subject
matter at the time of perfection, it
nevertheless considered a situation where the
seller is not the owner both at the time of
perfection and delivery of the subject matter
as to be similar to item number 5 of Article
1409 of the Civil Code as to contemplate an
impossible service,

Nool v. Court of Appeals

which prevents the seller from complying with

his obligation under Art. 1459 to transfer
ownership, and therefore would render the
contract inoperative and by the same
analogy, void.